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By Chris Frost
Tri County Sentry
Oxnard-- The city council approved the Infrastructure Use Fee (IUF) rate reduction and refund.
The refund of IUF funds totaling $7,112,897 was paid by Oxnard utility customers from January 1, 2020, through August 31, 2021, with Water customers receiving a credit totaling $3.208. million.
Wastewater customers received a credit totaling $2.015 million, and Environmental Resources customers received a credit totaling $1.890 million.
Judge Matthew Guasco ruled that the Infrastructure Use Fee being transferred into the general fund was unlawful and violated "the California Constitution, particularly Proposition 218."
The utility rate reduction is a combined estimated total of $3.556 million (a 3.2 percent reduction) for the period September 1, 2021, through June 30, 2022, and reflects the elimination of the IUF for this period. Water rates will be reduced by an estimated $1.604 million, wastewater rates by an estimated $1,008, and Environmental Resources rates by an estimated $944,842.
During public comments, Douglas Partello said what the City of Oxnard did was illegal and unreasonable.
"That's not my words; that's the words of the judge," he said. "I've been an Oxnard resident for 35 years, and I paid my water bill every month faithfully. I have my bill, and it's got my account number, my cycle route, it's got my billing date, and it says current residents past due and due now. I pay my bills on time. I pay taxes on time. I'm a good citizen, and I don't break the law."
He said Oxnard broke the law.
"They took the total since 2014, $39.5 million, and illegally siphoned it into the general fund to make up for their overspending," he said. "They overspent that money that should have never been there, to begin with. Then they want to blame Aaron Starr, who brought it to light. They vilify Mr. Starr, who's been a champion for the people. He's the reason why that money is going back to the utility fund. He's the reason, not the goodness of Mr. Nguyen's heart that he's refunding $7 million to the taxpayers. If you really want to do the right thing, and not just move in the right direction, pay it all back with interest and penalties."
Aaron Starr said morality is doing the right thing, even when nobody is watching or forcing you to do what is right.
"It's about making people whole when you've wronged them," he said. "Shortly after Judge Guasco determined the Infrastructure Use Fee was unlawful, I filed a refund claim on behalf of all the ratepayers. We all know the statute of limitations is one year, so the furthest we can go back is to January 2020."
Starr said he signed a tolling agreement to avoid having the action turn into a class-action lawsuit, hoping that the city would do the right thing and not have a class-action lawsuit.
"In one respect, it's smart to give back refunds from January 2020 because that will obviate the need for a class-action lawsuit," Starr said. "It certainly wasn't because the city wanted to make things right. The city manager admits in his press release that the ruling on this matter was fair and reasonable. Okay, so we all agree with the judge that the IUF was illegal and unreasonable. But the city doesn't seem determined to make things right. If they were, they wouldn't have stopped at January 2020, which is the bare minimum. If they really believed in making it right, you would be refunding the additional $32 million that was charged to ratepayers from 2014-2019. That's an average of over $800 per ratepayer. That's a significant amount of money you've deprived people. You've wronged them. You have a moral obligation to make it right, not to say; this is what we can get away with."
City Manager Alex Nguyen said the City of Oxnard is in the process of taking several actions that it must do following the court ruling.
"I did say, and I've said it on multiple occasions, that I found the judge's ruling to be fair and reasonable," he said. "The first thing the council had to act on, which we've done, is figure out the repayment schedule ordered by the judge, the $36.5 million to be repaid to the utilities. I want to be clear about that. The judge's order was to return the funds to the utilities."
He noted that the council is acting on the appropriate credit and rate reduction going forward.
"Next, we will begin the process to conduct a new IUF Nexus study and return it to the judge for his review," Nguyen said. "That is part of what the ruling included. It left us with the ability to do so, and I still believe that while this city implemented the IUF incorrectly, an IUF is possible, and the judge would not have offered for us to return with a new study if he did not agree."
At some point, he said the city would need to review all its rates based on services and operations.
Nguyen said the city is not interested in vilifying Starr, but they disagree most of the time.
"I think that's normal in our open and democratic process," he said. "What happened here has also been characterized that the city embezzled money. That's not what happened here. The city made a mistake, and we collected the IUF in error. The money was not embezzled to do anything nefarious. It went to public services. In the beginning, it not only went to streets and road maintenance; it went to public safety services. At a certain point, the city decided to discontinue collecting the public safety portion and continue to collect the street and maintenance portion. At the time, the city thought it was doing it correctly."
That turned out to be wrong, he said, and that is what the court ruled.
"We are taking the steps necessary to collect our actions," he said. "Cities make mistakes, and in the time that I've been here when we come across one, we are open and clear about it. We never cover anything up. I guarantee you they'll be more mistakes in the future."
During council comments, Gabe Teran asked if the collected IUF was overspent, and that's why the city can't afford to pay it back, as required by the judge.
Nguyen said he didn't agree with Partello said the money was overspent, but he did agree that it was over-collected.
"Those funds went for public services," Nguyen said. "Fortunately, we are in a position with the three-year repayment schedule that the court granted us; we can repay the utilities the full $36.5 million."
Councilman Bert Perello noted that Oxnard was mismanaged for a long time.
"When we have people talking about the bathrooms (at a park during public comments) and the response from the city manager," he said. People were talking about the potholes. When it came to the attention of the council about how bad the sewer department had been allowed to get, then it came out that we were financially in hot water. We need to look backward and find out where that happened. It doesn't cut the mustard in respect of taking responsibility for today. Tonight, at this council meeting, the people that are complaining, it would have been interesting to hear them make statements about when this stuff was first coming to light. I give Mr. Starr one heck of a lot of credit for him and his wife for the things they have done. The accusations that it was used to pad salaries, pad pensions, and used as a slush fund is wrong. This city was being held together with bubble gum and baling wire, and nobody wanted to face the music."